Welcome to Consumer Reports Advocacy

For 85 years CR has worked for laws and policies that put consumers first. Learn more about CR’s work with policymakers, companies, and consumers to help build a fair and just marketplace at TrustCR.org

Fact sheet on CFPB and Congressional efforts to weaken it

Consumer Financial Protection Bureau (CFPB):
A Financial Watchdog In Washington For Consumers

The CFPB Gets Ready to Launch in July But Is Already Under Attack in Congress

In 2010, consumers fought hard for real financial reform and won. The Wall Street reform bill passed by Congress and signed into law by President Obama created the Consumer Financial Protection Bureau (CFPB) to rein in unfair financial practices and products.
The CFPB will oversee a wide variety of financial products, including mortgages, credit cards, checking accounts, student loans, payday loans and more. It’s the first time we’ll have a watchdog in Washington whose sole mission will be to protect consumers from financial scams and rip-offs. Once it’s up and running in July, the CFPB will be able to hold the big banks and financial firms accountable and ensure that they play by the rules.
But before the CFPB has even opened its doors, it has come under attack by opponents of reform. That’s why its so important to urge Congress to oppose efforts to weaken the CFPB.
The CFPB will have the power to protect consumers in a number of ways:

• Make sure financial companies are following the law: The CFPB will oversee the financial marketplace and enforce laws that outlaw discrimination and unfair treatment of consumers. It will have the power to impose fines on companies that violate the law and require repayment to aggrieved consumers.

• Collect and respond to consumer complaints: The CFPB will set up a web site and toll free phone number so consumers can report problems they are experiencing and get the assistance they need.

• Enact new protections to ensure consumers are treated fairly: A key part of the CFPB’s job will be to keep an eye out for emerging harmful financial products and practices and to enact new protections for consumers as needed.

• Promote financial transparency: The CFPB will work to make sure that financial companies provide consumers with the information they need to understand the true costs and risks of different products.

The CFPB could address a number of abusive financial practices:
Confusing financial contracts: Most consumers report that they have a hard time understanding financial contracts and disclosures. The CFPB could require that mortgages, credit card contracts and other documents for financial products must be simplified and easier for consumers to understand.
New credit card tricks: The new credit card reform law provided important new protections for consumers, but some banks are coming up with new sneaky practices. The CFPB will be in charge of enforcing the law and could add stronger safeguards like limiting the size of penalty fees and interest rates.
Credit report mistakes: Many consumers are frustrated to discover errors on their credit reports and that the credit bureaus can be slow to correct them. The CFPB could ensure that credit bureaus are complying with existing requirements to maintain accurate consumer credit files and require them to investigate and fix errors reported by consumers.
Unfair overdraft practices: The CFPB could take action to curb tricky marketing practices to get you to sign up for high cost debit overdraft programs and stop banks that charge a $35 overdraft fee for a $10 bounced check or three $35 fees in one day for three small bounced checks.
High-cost payday loans: Payday loans are an expensive way to borrow money. The CFPB could take action against payday lenders who charge annual percentage interest rates of 400-700 percent or more and keep consumers in a cycle of debt.
Costly prepaid cards: Prepaid cards come with weak consumer protections and a whole host of confusing fees that can add up quickly. The CFPB could require prepaid card issuers to limit fees and protect consumers when cards are lost or stolen.
CFPB is Under Attack in Congress
A number of bills have been introduced in Congress that would threaten the CFPB’s ability to respond to rip-offs in the marketplace. Chief among them is a bill sponsored by Representative Spencer Bachus (AL) that would hurt the CFPB’s ability to protect consumers by replacing its director with a five-member commission. By doing so, the bill would slow down the CFPB’s decision making process and make it more prone to internal discord.
It’s critical for the CFPB to be led by a single director. For years, consumer advocates warned that subprime and other exotic mortgage lenders were putting homebuyers at risk because they were pushing loans based on hidden costs and phony promises that made them impossible to pay off for many borrowers. It’s now clear that the failure to act quickly and effectively to protect consumers from these lending abuses played a key role in triggering a record number of foreclosures and ultimately sparked the deepest economic decline since the Depression.
We can’t afford to hamstring the CFPB with an unnecessarily complicated bureaucratic structure. Moreover, the added costs associated with a commission would be particularly unwise at a time of limited resources.
In addition, the Wall Street reform bill that created the CFPB already empowers a Financial Stability Oversight Council (made up of representatives of other banking agencies) to set aside new rules developed by the CFPB if it determines by a two-thirds vote that they put the safety and soundness of the banking system at risk. This check strikes the needed balance on the CFPB’s authority without undermining its ability to protect consumers. Congress should reject any other attempts to weaken the CFPB’s ability to protect consumers.